Guide to Savings Accounts with Monthly Interest

With Bank of England base rates set at just 0.5%, it's been hard for savers to enjoy a decent return. This has hit people who are retired and depend upon their savings the hardest. If you haven't reviewed your finances in some time, it's important that you do so as soon as possible. Savings accounts with monthly interest may not pay as much as they did, but you can still achieve a healthy return on your investment capital. Better still, the interest can be sent directly to your current account each month.

Post Office 1 Year Online Bond, Issue 5

Provided that you're prepared to lock up your money for a year, you'll receive a guaranteed 3.41% AER. You'll need to invest at least £500, and this amount cannot be added to at a later date. If you do need to withdraw your money early, you'll pay a "breakage fee" that's equivalent to the loss of 90 days' interest. This is why it's essential that you fully consider your options and make adequate provision for emergencies.

Barnsley BS 1 Year Fixed Rate Online Bond

This is another 1-year bond that pays an attractive 3.5% AER. You'll need to invest at least £1,000, but you can add to your balance. Withdrawals are only permitted in exceptional circumstances, such as if you develop a critical illness. However, each case will be assessed individually.

ING Direct High Interest Savings Account

If you want to be able to access your money at any time and receive a competitive 3% AER, this ING instant access account is ideal. However, the account will need to be reviewed after a year has elapsed because the bulk of the interest is made up of a 2.46% gross bonus. In other words, you'll only receive the Bank of England base rate after 12 months.

Types of Savings Accounts with Monthly Interest

You'll need to determine how long you can afford to lock up your capital. This will ultimately determine which fixed-rate bonds and monthly savings accounts are right for you. You should also take advantage of any tax-free savings accounts, especially if you're a higher rate taxpayer. Aside from the return, these are your main considerations. Your investment capital is 100% safe.

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